Mortgage Glossary

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Balloon Note

A note calling for periodic payments which are insufficient to fully amortize the face amount of the note prior to maturity, so that a principal sum known as a "Balloon" is due at maturity.

Balloon Payment

The final payment of a mortgage which is larger than the regular payment; it usually extinguishes the debt.

Bankruptcies

A court action to restructure debt.

Beneficiary

The lender named on the mortgage note.

Binder

Preliminary agreement of sale, usually accompanied by earnest money (term also used with property insurance).

Blanket Mortgage

A mortgage covering more than one property of the mortgage.

Bond

A debt instrument in the capital markets. The US government, corporations, and municipalities use bonds to raise money. Bonds can also be backed by real estate loans and the payments from mortgages.

Bridge Financing

A form of interim loan generally made between a short term loan and a long term loan, when the borrower needs to have more time before taking on long term financing.

British Thermal Unit (B.T.U.)

Unit of heat required to raise one pound of water one degree Fahrenheit.

Broker

A person that represents another for a fee in real estate transactions. Mortgage brokers help consumers locate suitable real estate loans and are paid a fee for their services.

Buy down

An interest rate buy down is the temporary reduction of the rate of interest or the monthly payments borrowers pay to the lender. The shortfall between the rate on the note and initial payment made by the borrower is usually paid by a third party such as a seller or builder.

Buyer's Broker

Agent who takes the buyer as a client, and is obligated to represent their interest above all others, and owes specific fiduciary duties to the buyer.